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Mr. Hegarty’s Shared Services pilot: reality check

UT’s chief financial officer Mr. Hegarty has argued that a pilot should be run in order to assess the feasibility of shared services on campus. Given the professed goals of shared services this is either a deeply flawed proposal or a misleading description of the central administration’s actual plan. A pilot typically refers to a small-scale study done in order to assess the feasibility of and work out details in implementing a larger scale project or study.

Shared services gain efficiencies through economies of scale. The effectiveness of efficiency gains by such means can only be assessed through implementation on a fairly mass scale. According to a guide on shared services for management (Essentials of Shared Services by Bryan Bergeron, 2003)”There’s a minimum company size and revenue stream, below which the shared services model doesn’t make sense.” [1].

Furthermore, a drawback of shared services is high start-up costs, similar to starting a new company (one of the negatives of the model compared to outsourcing according to its advocates) [2].

Literally piloting shared services for a business would thus be a pointless and costly financial endeavor. One would have high-startup costs, and it would be impossible to assess the actual efficiency gains, since these are achieved through economies of scale.

It is likely, therefore, that the “pilot” is just a euphemism for initiation of the plan. Central UT administration has not spelt out any circumstances that would lead them to not follow through with the shared services plan in its entirety anyway. When Mr. Hegarty was asked about how the data from the pilot would be collected and how much this research would cost at the GSA on October 30th, he said he did not know. There appears to be no plan to assess the pilot, let alone assess it independently. Even if there was, it is unclear what these data would demonstrate because of how efficiencies are gained in shared services models.

These considerations make it understandable why UT central administration has made the pilot meetings for shared services closed to the public and campus at large.